DOD Required to Reimburse Pension Cost Deficit

Jul.18.2012

In Raytheon Co. v. U.S.(July 16, 2012), the Court of Federal Claims awarded Raytheon $59.2 million for the "segment closing adjustment" required by CAS 413 to cover unreimbursed pension costs in two business units sold by Raytheon in 2001 and 2002, finding on virtually every contested issue that the calculation of Raytheon's expert actuarial witness was reasonable and that the government's expert had not carried the burden of proving that the Raytheon calculations were noncompliant with CAS. In addition, effectively reversing a prior decision in Raytheon Co. v. U.S., 96 Fed. Cl. 548 (2011), and addressing an issue that will have potentially broader implications beyond CAS 413 segment closing cases, the court found that Raytheon's agreement to the standard form novation language under which the seller "waives" all claims against the Government on novated contracts did not result in a waiver of the CAS 413 segment closing claim on several grounds.